Zell, Plaintiffs Vie for Support of 'Partners'

The legal effort by a group of current and former Los Angeles Times staffers to wrest control of Tribune Co. away from Sam Zell is quickly turning into a war of words.

Yesterday, Zell responded to the class-action lawsuit against him and other Tribune officials publicly, by calling the suit "frivolous," and internally, by accusing the plaintiffs of "maligning the company" in a memo to employees.

"We are partners," he wrote. "We need to act like it."

The plaintiffs responded with their own withering broadside, accusing Zell of using the term "partners" only "cynically," to further his own interests. "Partners don't treat partners like Zell treats the Tribune employees," they wrote in a statement (reprinted in full below.) "Sam Zell has billions of dollars and does not have his livelihood at stake. For example, Zell's upcoming birthday party will feature The Eagles. Ask Sam: how many of his 'partners' are spending their birthdays in a similar fashion?"

As things get heated, it occurred to me to wonder what sort of protections exist for current Tribune Co. employees who wish to join the suit. So far, columnist Dan Neil is the only plaintiff still on the Tribune payroll. He says there is a provision in ERISA (the Employee Retirement Income Security Act, alleged violations of which are the grounds for the class-action complaint) that forbids an employer from firing or directing any reprisals at whistle-blowers. "But of course you can sue the Pope for paternity," he adds.

I also checked in with Ann Marie Lipinski, who resigned in July as editor of the Chicago Tribune, to see if she plans on joining the plaintiffs. Lipinski hasn't said publicly that the actions of Zell's regime were the reason for her quitting, but it's been widely assumed.

But Lipinski, who recently joined the University of Chicago as vice president of civic engagement, says she hasn't even considered the question. "I'm very consumed right now with moving onto my next job. Your question is the first I've had about it."

Here's the plaintiffs' response to Zell's statement and memo:

In his email to Tribune employees earlier today, Sam Zell dismissed the allegations against him and his co-fiduciaries as "frivolous and unnecessary." "We are partners," the email continued, "we need to act like it."

This statement is a standard Zell response: lacking in specifics and filled with vitriol. The complaint is detailed and the allegations are correct. The complaint asserts that the Tribune ESOP has not provided the rank and file employees with a detailed justification for the Zell acquisition. Ask Sam: where's the detailed justification? The Tribune pension administrators have not provided the retired Tribune employees with an explanation as to why the pension plan was supposedly over funded by $400 million. This explanation is particularly necessary given the current downturn in the stock market. Ask Sam: where's the explanation? The directors have established a conflict of interest policy for related party transactions. Ask Sam: explain how the conflict of interest policy has been followed with HIS relatives?

The current and former Tribune employees are not "all in this together" with Sam Zell. The rank and file employees have their jobs and their current and future retirement plans tied up by the machinations of Zell and his co-fiduciaries. Their salaries are low and they see many of their colleagues being let go on a monthly basis. On the other hand, Sam Zell has billions of dollars and does not have his livelihood at stake. For example, Zell's upcoming birthday party will feature The Eagles. Ask Sam: how many of his "partners" are spending their birthdays in a similar fashion?

Speaking of "maligning the company in public," we ask that journalists covering this story consider Sam Zell's prior comments denigrating print journalism. Imagine if the Chairman of Procter & Gamble stated: "I don't use Ivory Soap. I hate Ivory Soap." Despite it all, these newspapers are continuing to produce great journalism.

Zell's comments fail to acknowledge the billions of dollars in debt he caused the Tribune Company to incur, necessitating both the layoffs and the diminishing content of the Company's newspapers. It is unfortunate that, in typical fashion, Sam Zell is ignoring the rights and neglecting the best interests of the hard-working Tribune employees, whom he cynically refers to as "partners." Rather than working with his "partners," he is tearing the company down, brick by brick, and selling it off, in an effort to pay down the massive debt he improperly encumbered the company with. We look forward to cutting through Zell's self-serving, out of touch rhetoric and fighting for our clients - the Tribune's real and rightful owners - in court.

In these turbulent times, fiduciaries must act in the best interests of their employees, particularly when they are the "owners" of the company. Zell and his co-fiduciaries have utterly failed to do so as more specifically described in the complaint.

Partners don't treat partners like Zell treats the Tribune employees.

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